I’ve given a lot of interviews, candidates will always try to come up with the best story as an answer to your question because “I can’t think of an example” is not an acceptable answer. It’s a demand you’re placing on them.
Also having experience puffed up on a resume happens around 100% of the time. The point of the interview is to figure out how much real relevant experience the candidate has.
OP was right to end the interview as they were an unprepared candidate and a bad fit, but low-key threatening someone with “word gets around” who’s trying to find a job and probably starting to panic about not having one doesn’t make him the good guy in this story that he thinks it does.
OP could have just told them not to use AI in future, but even that’s unnecessary as the lesson’s already been learned.
(I’ve also noticed that towards the end of the post OP mentions this, but it doesn’t line up with the actual call as described unfortunately)